Yr5 - Massive fall in AR reading level - what do i do?

[JFHARTRR]

In July at end of Yr4 DS was at a 6.1 AR level and getting 9/10 or 10/10 on the book comprehension tests.
His recent star test has given a 4.0 level, despite reading 4 books across the summer holidays . This was the level he was at in October of Yr3.

The teacher says he should only read at his new level to "rebuild foundational skills" and if he does this then she is sure he will be back to his old level soon.
However, he is devastated with the new rating. He's said there's no point in even trying any longer as he's never going to get better no matter what he does and refuses to even pick up a book which "little kids" are reading.
The background information is that DS is dyslexic. His reading progress so far has been really hard fought. He hates reading with a passion, but in the last year finding book series like Skandar, Loki, and the Breakfast clubs (as well as Tom Gates previously) has given him a new found tolerance for books. It was actually nice this summer to see him voluntarily pick up a book and enjoy reading. It is quite upsetting to see his spirit so broken.
The one upside is that other boys saw similar falls, although from higher ratings and without the underlying issues.

Any ideas how I should approach this one?

I used to be a secondary English teacher. I can’t actually believe that children are even told what level they are reading at. They shouldn’t even know. Reading should be fun and interesting, not performance based. I’d tell him the truth, the rating means nothing and isn’t important.

@JFHARTRR I’m really sad to hear this has disheartened your DS. I hope he can find enjoyment from stories again. It’s so unfair that he feels judged as “not being as good” when he has to work so much harder than others to keep up.
Abi Elphinstone has written some fabulous dyslexic-friendly books.

What is all this AR nonsense? Kids don't need to know these numbers. They need to know that they can pick up a book, enjoy it and escape into another world at will. The late great Sir Terry Pratchett was a great proponent of children reading whatever they want, and lots of it. He read widely from an early age and it stood him in very good stead. Ignore the teachers, let him read for pleasure. What the teacher doesn't know won't hurt them.

We have gleefully ignored the AR scheme at home and my daughter has read whatever she was drawn to from the town library or was given as presents etc. The crappy AR book comes to and from school in her bag and we pay it no attention. She reads it a bit in school. Strangely enough she now has the highest reading ability in her class and is roughly 4 years ahead of her age. I wouldn't read most of the books school sends her home with, they look so boring. Reading should be a joy. AR seems to kill it.

My child's school uses AR, with the caveat that you don't have to stick to your level and can read ANY book. Using it this way, it is a really good system, just annoying when books aren't listed. Sometimes the quizzes are crap, and getting any wrong can skew your level. Can he not have the chance to retake the test? Also, audio books count, will he listen to books instead of read them for now?